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“Big Six” Becomes Five: Potential Merger Between Disney and Fox

For decades, the Hollywood movie industry has been dominated by six major studios. Now, however, it seems that these six will likely shrink to five. A deal is being discussed in which Walt Disney Co. will buy most of the assets of 21st Century Fox Inc., acquiring the Twentieth Century Fox film studio and reducing the number of studios currently putting out the most popular movies.

These discussions might not necessarily lead to a deal - there are issues that have yet to be negotiated completely. However, Disney is considering buying Fox for more than $60 billion, mostly because of its television distribution and production businesses, according to people with knowledge about the talks. In doing so, Disney would obtain Fox’s foreign satellite services such as the Star cable and media company in India and the British broadcaster Sky, some U.S. cable networks, and major control of streaming service Hulu.

The purpose of this merger is to contribute to the transformation to a digital force that Disney is currently undergoing. The services that the company would gain from Fox would advance Disney Chief Executive Robert Iger’s goal of allowing Disney to create content that could be distributed to consumers directly and more broadly. This agreement would give the studio the ability to put out its own films rather than have to sell them to other companies such as Netflix and Amazon as well as an international outreach through Star and Sky.

Fox is also considering a deal with Comcast, but negotiations with Disney are progressing more quickly: an announcement could be made as soon as next week. In addition, merging with Disney is less of a regulatory risk; an arrangement with Comcast has some similar features to AT&T’s potential purchase of Time Warner, which the Justice Department is opposed to. A deal between Fox and Disney could potentially split up the Murdoch family’s team, which is currently in charge of 21st Century Fox, with Fox’s Chief Executive James Murdoch leaving for a senior executive position at Disney instead.

Should the deal go through, it would be another great change in the entertainment industry. Powerhouses such as Disney are working to rival rapidly growing firms such as Netflix, and acquiring Fox would help Disney achieve its goal and maintain its influential position in the industry.